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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The sum of consumer surplus and producer surplus
Total Welfare
Marginal tax rate
Normal Profit
Spillover costs
2. The total quantity - or total output of a good produced at each quantity of labor employed
Oligopoly
Long Run
Total Product of Labor (TPL)
Monopoly long-run equilibrium
3. Product demand - productivity - prices of other resources - and complementary resources
Determinants of Labor Demand
Constant Returns to Scale
Total Revenue Test
Price Ceiling
4. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Collusive oligopoly
Free-Rider Problem
Law of Supply
Scarcity
5. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Relative Prices
Long Run
Determinants of elasticity
Profit Maximizing Resource Employment
6. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Diseconomies of Scale
Surplus
Substitute Goods
Price discrimination
7. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Determinants of elasticity
Total Fixed Costs (TFC)
Total variable costs (TVC)
Marginal tax rate
8. 0 < Ei < 1
Necessity
Monopolistic competition
Perfectly elastic
Monopoly
9. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Market power
Price discrimination
Total Fixed Costs (TFC)
Substitute Goods
10. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Public goods
Marginal Product of Labor (MPL)
Diseconomies of Scale
Negative externality
11. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Law of Demand
Market power
Constant cost industry
Long Run
12. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Perfectly inelastic
Complementary Goods
Marginal tax rate
Monopolistic competition
13. TR = P * Qd
Average Total Cost (ATC)
Total Revenue
Economics
Shutdown Point
14. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Perfectly elastic
Cartel
Utility Maximizing Rule
Explicit costs
15. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Break-even Point
Positive externality
Economic Profit
Excess Capacity
16. Occurs when LRAC is constant over a variety of plant sizes
Constant Returns to Scale
Marginal Benefit (MB)
Law of Supply
Price Elasticity of Supply
17. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Short run
Law of Increasing Costs
Absolute prices
Determinants of Supply
18. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Inferior Goods
Average Fixed Cost (AFC)
Constrained Utility Maximization
Marginal Productivity Theory
19. The practice of selling essentially the same good to different groups of consumers at different prices
Absolute prices
Perfectly inelastic
Total variable costs (TVC)
Price discrimination
20. The imbalance between limited productive resources and unlimited human wants
Constrained Utility Maximization
Relative Prices
Scarcity
Oligopoly
21. AFC = TFC/Q
Natural Monopoly
Average Fixed Cost (AFC)
Law of Increasing Costs
Relative Prices
22. Models where firms agree to mutually improve their situation
Total Revenue
Collusive oligopoly
Determinants of elasticity
Perfectly elastic
23. Total product divided by labor employed. APL = TPL/L
Determinants of Demand
Market Economy (Capitalism)
Average Product of Labor (APL)
Excess Capacity
24. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Consumer surplus
Substitute Goods
Marginal tax rate
Decreasing Cost industry
25. A firm that has market power in the factor market (a wage-setter)
Perfectly elastic
Natural Monopoly
Monopsonist
Utility Maximizing Rule
26. Es = (%dQs) / (%dPrice)
Free-Rider Problem
Price Elasticity of Supply
Producer surplus
Increasing Cost Industry
27. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Average Fixed Cost (AFC)
Accounting Profit
Income Elasticity
Perfectly competitive long-run equilibrium
28. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Production function
Spillover benefits
Natural Monopoly
Spillover costs
29. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Determinants of elasticity
Negative externality
Market power
Law of Increasing Costs
30. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Spillover benefits
Free-Rider Problem
Cross-Price Elasticity of Demand
Constant Returns to Scale
31. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Private goods
Complementary Goods
Total Product of Labor (TPL)
Non-collusive oligopoly
32. When firms focus their resources on production of goods for which they have comparative advantage
Market Economy (Capitalism)
Specialization
Total Fixed Costs (TFC)
Price Elasticity of Supply
33. Ei > 1
Substitution Effect
Luxury
Opportunity Cost
Least-Cost Rule
34. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Marginal Revenue Product (MRP)
Negative externality
Positive externality
Law of Supply
35. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Normal Profit
Natural Monopoly
Profit Maximizing Rule
36. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Constrained Utility Maximization
Average Fixed Cost (AFC)
Monopoly
Inferior Goods
37. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Monopoly long-run equilibrium
Monopolistic competition long-run equilibrium
Marginal Productivity Theory
Allocative Efficiency
38. The output where ATC is minimized and economic profit is zero
Break-even Point
Determinants of elasticity
Productive Efficiency
Average Variable Cost (AVC)
39. Ed = (%dQd)/(%dP). Ignore negative sign
Price Ceiling
Profit Maximizing Rule
Price elasticity
Free-Rider Problem
40. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Relative Prices
Perfectly competitive long-run equilibrium
Income Effect
Price floor
41. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Break-even Point
Short run
Price floor
Explicit costs
42. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Luxury
Price Elasticity of Supply
Dead Weight Loss
Fixed inputs
43. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Law of Diminishing Marginal Utility
Collusive oligopoly
Total Product of Labor (TPL)
Explicit costs
44. A good for which higher income increases demand
Spillover costs
Normal Goods
Average Product of Labor (APL)
Marginal Productivity Theory
45. Ed = 8 - infinite change in demand to price change
Perfectly elastic
Demand for Labor
Normal Profit
Negative externality
46. Ed < 1
Income Elasticity
Price inelastic demand
Determinants of Supply
Excess Capacity
47. Ed = 1
Unit elastic demand
Perfectly competitive long-run equilibrium
Variable inputs
Break-even Point
48. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Explicit costs
Derived Demand
Income Effect
Increasing Cost Industry
49. The difference between total revenue and total explicit and implicit costs
Dead Weight Loss
Allocative Efficiency
Economic Profit
Profit Maximizing Resource Employment
50. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Normal Goods
Comparative Advantage
Total Product of Labor (TPL)
Perfect competition